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Hasbro profits beat expectations

Monday, October 22 17:11:36

Hasbro Inc topped Wall Street profit expectations today as better inventory management and cost controls helped offset weak sales at the second-largest U.S. toymaker.

The news came after larger rival Mattel Inc also reported a higher-than-expected quarterly profit, supported by price increases and cost controls. The maker of Barbie dolls and Hot Wheels cars said it was well-positioned for the holidays.

Hasbro, whose brands include Monopoly, G.I. Joe, Nerf and Mr. Potato Head, has been working with its U.S. retail partners to better manage inventories this year. It has been trying to shift toy deliveries closer to peak demand times.

It struggled in late 2011 when demand in the United States and Canada tapered off after a strong start to what is typically the biggest selling season of the year.

Hasbro is counting on retailers to this year order more inventory in the fourth quarter once they have a better read on consumer demand, Needham and Co analyst Sean McGowan said. "That is not to say they are expecting consumer demand to be much higher, but more a reflection of the fact that last year and for years before that, they simply shipped more before the fourth quarter than they should have," he added. "However, if retailers don't like what they see, they can easily cancel orders, and I think there is a risk of that happening again," McGowan said.

On Monday, Hasbro Chief Financial Officer Deborah Thomas said the company plans to step up its marketing efforts in what she described as "an environment of significantly lower U.S. retail inventory."

The toymaker said to drive demand in the fourth quarter they will increase ad spending 30 percent to 40 percent across television, social media and other online avenues.

Hasbro said it expects revenue and earnings per share to increase for the full-year 2012, excluding the impact of foreign exchange.